Electric motors, the work horses of industrial processes, are used in various industrial applications such as fans, pumps, compressors, mixers, grinding mills, metal rolling, mine hoists, cranes, and refiners. They are designed for efficient operation in challenging and severe environments. Reliability and ease of maintenance are some of the critical parameters that determine the selection of the motors. Electric drives or power converter circuits are used with motor drives, and provide either direct current (d.c) or alternating current (a.c) output and are powered from either a d.c. or a.c. mains supply. The primary purpose of this equipment is to control the speed of electric motors during different working conditions to save energy.
Electric motors and drives are used in a wide range of industries including but not limited to oil and gas, marine, power and energy, mining, cement, metals, pulp and paper, water and wastewater. As the demand for electric motors is increasing, end users are facing the challenge of maintaining a continuous, reliable operation while keeping cost under control. However, reliability of motors has gained prominence over maintaining lower operation costs. Regular servicing of these assets is critical for increased uptime and extended life cycle.
Frost & Sullivan’s research scope of the electric motors and drives services market includes installation and commissioning, training, engineering, and consulting, maintenance, spare parts and consumables, repairs, extensions and upgrades (retrofits), replacements, end-of-life and advanced services. Research has revealed that services companies focus on repeat business, as trust and business rapport are the key factors in securing services orders.
Over the past few years, end users have started opting for an effective motor and drive maintenance plan which is rigorous and have started to prefer service packages that ensure higher uptime of the rotating assets.
The maintenance plan includes condition monitoring of assets, including remote assets, enabling predictive and preventive maintenance which facilitates planned maintenance and higher uptime as against the age old practice of breakdown maintenance. The trend to adopt life-extension service programs gained prominence during the economic turndown in 2009, the recovery years after that as well as during more recent periods of economic uncertainty, as companies no longer are governed by the rule to minimize operational costs but rather by the principle to minimize capital expenditure.
Frost & Sullivan’s (F&S) research on the European and Asia Pacific Electric Motors and Electric Drives Services Market highlights that differentiation through technology innovation is limited compared to the service business innovation. The convergence of information technology (IT) and operational technology (OT) has enabled digitization of the industrial world and is now known as Internet of Industrial Things (IoIT). However, its adoption is still at an early stage.
The convergence is creating a visible shift in the way servicing of motors and drives are handled. The adoption of IoIT has resulted in a notable transformation in the advanced services segment which comprises value added services such as asset optimization, process safety, environmental compliance, system performance, energy efficiency, maintenance management, and cyber security.
The use of big data analytics and cloud services is likely to bolster the quality of service. New service offering including alerting services for equipment maintenance using IoIT technologies that involve diagnostic software being hosted from cloud with Software as a Service (SaaS) model, and motor control through mobile device and related services are likely to see high uptake.
The research also highlights that adoption of advanced services is expected to witness a robust growth led by end users’ requirement to reduce energy expenditure and equipment related capital expenditure. Service providers, who constitute the tier 2 segment, are more likely to tap into this segment of servicing, as they are better positioned to offer packaged services and multi-vendor product service support.
For example, the drives market report highlights that the market is dominated by the external service revenues, which is nearly 73% of the total market revenues, estimated to be $2.0 billion in 2014. This is expected to grow at a CAGR of 6.4% for the period 2014-2019. This research also highlights that advanced services segment is expected to grow at a CAGR of 7.3%, while the maintenance service segment is likely to grow at a CAGR of 7.9%.
Analysis of the supply chain in the market shows that while motors and drives manufacturers have a vantage position in this market due to their technical know-how and global network of repair facilities and field engineering; they face stiff competition in the developing regions such as Asia-Pacific. The pure play service providers who do not manufacture the equipment, remain competitive through their value proposition of multivendor make service capability. So, over the years, value proposition has gone beyond the technical domain. In the recent past, some of the motor and drives manufacturers have also ventured into expanding the service capabilities by accommodating servicing of other manufacturers’ products either by developing the capability or acquiring suitable companies. Moreover, recently, the electric motor and drives servicing landscape has been witnessing a trend of end users preferring a single service source. This reduces administrative costs and operational inconsistencies allowing them to concentrate on production.
Hence, the manufacturers in the electric motors and drives market who have decided to evolve their business model for the digital age have to consider the option of expanding their business organically or inorganically. They have to decide if they want to partner with other companies or do it themselves by collaborating with their customers. Frost & Sullivan’s analysis highlights that end users are more inclined to outsource servicing of their electric motors and drives assets, as they want to focus on their core manufacturing business. This is likely to provide unlimited opportunities to the manufacturers and service providers in this market in the next five years.